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(Note: This article has been updated from the version published Tuesday morning to include new information.)

The clearest path to college credit for massive open online courses may soon be through credit recommendations from the American Council of Education (ACE), which announced Tuesday that it will work with Coursera to determine whether as many as 8-10 MOOCs should be worth credit. The council is also working on a similar arrangement with EdX, a MOOC-provider created by elite universities.

The Bill & Melinda Gates Foundation is funding that effort as part of $3 million in new, wide-reaching MOOC-related grants, including research projects to be led by ACE, the Association of Public and Land-grant Universities (APLU) and Ithaka S+R, a research group that will team up with the University System of Maryland to test and study the use of massive open online courses across the system. (See related article on the latter effort here.)

Until now, MOOCs have been a source of fascination mostly because they make teaching by top-notch professors at prestigious universities free and available on the Internet to students anywhere, including in developing countries. Most MOOCs from high-profile providers such as Coursera, EdX, Udacity and Udemy feature upper-division material aimed at students looking to hone their skills or who are merely curious.

Tuesday's rollout, however, helps open the door to the courses’ use by credit-seeking students, particularly the growing adult student market. And the new round of grantees includes 10 institutions that the Gates Foundation has tapped to develop introductory and remedial courses, which often trip up low-income and first-generation college students.

Perhaps most importantly, Tuesday’s announcements signal that traditional higher education (represented by ACE and APLU) and Gates, the primary force behind the national college “completion agenda,” both believe in the disruptive potential of MOOCs.

Not everybody is thrilled about MOOCs, however. Some faculty members fear that colleges might rush to use the courses without attention to academic quality or before much is known about how well they work. And automated testing and peer grading remain unproven substitutes for professors, who may also worry about MOOCs being a way for technocrats to cut faculty jobs.

ACE will need to do selling among its members if it is to issue credit recommendations for MOOCs. With more than 1,800 member institutions, the umbrella group represents many colleges that have a chilly take on what the council calls the “disruptive potential” of MOOCs. Some, for example, don’t accept transfer students or certain forms of transfer credit. And others do not issue credit based on ACE’s credit recommendations.

An even bigger backlash could come from colleges who may see their business models threatened if the issuing of credits for the courses becomes viable. If that happens, MOOC providers might take money out of the pockets of some open-access colleges whose students seek credit for courses they take elsewhere.

To help consider the potential benefits of MOOCs, as well as their downsides, the council will create a panel of presidents from a wide range of institutions. The group, dubbed the “Presidential Innovation Lab,” will look at new academic and financial models inspired by MOOCs, which could in turn help improve degree production.

“They will kick the tires. They will issue reports. They will see how this fits,” said Molly Broad, ACE’s president.

Likewise, APLU announced Tuesday that it plans to use its Gates grant to create an “interactive learning consortium” that will study how to bring public universities and community colleges together to potentially tap MOOCs’ potential.

Representatives from the council and the foundation said the round of grants seek to explore the trendy courses’ largely unproven value in helping faculty members reach more students, potentially cutting costs and contributing to evolving teaching methods.

“We are increasingly interested in the potential of MOOCs because they are demonstrating the possibility of making content and learning more accessible and affordable at web scale -- for at least some students and types of content,” a Gates Foundation spokeswoman said in a written statement. “We are eager to learn from and share the data that will be generated from our investments in MOOCs in order to advance teaching and learning.”

Credit Where It's Due?

Approximately 2 million students have signed up for MOOCs this year, and that number is growing rapidly. But few, if any, of them have received credit for successfully completing those courses.

The major MOOC providers issue some form of non-credit certificates -- a “statement of accomplishment” in Coursera’s case. But those documents are signed by individual professors without the seal of their employer. In fact, the fine lines on the quasi-credentials typically include multiple disclaimers that distance their recipients from the universities where MOOC professors work.

There are, however, several emerging possibilities for students who might want to seek credit for what they learn in a MOOC.

For example, Coursera last month struck a licensing deal with Antioch University. Under that arrangement, Antioch will pay to use the company’s MOOCs as material for credit-bearing courses. University instructors will oversee those courses, which will count toward bachelor’s degree programs.

The licensing agreement with Antioch is one of the first instances where a third-party institution forks up money to use MOOC content from another university in its curriculum.

Another potential path is through prior learning assessment, which is the process of awarding credit for learning that occurs outside of the traditional academic setting. This can take the form of individual student portfolios, where students make the case for what they know through a presentation that is reviewed by faculty members with expertise in relevant subject matter. So far, it's unclear whether students have begun attempting this with MOOCs, but experts said they will soon.

Another form of prior learning assessment is through programmatic review, where the issuer of credit reviews the learning and experience delivered by a particular training programs, such as those offered by companies or the military. Colleges do this, particularly those that specialize in serving adult students. And ACE has been a leader on this form of prior learning assessment for decades, bringing in teams of faculty contractors to study on-the-job training and experience offered by the military and other government agencies, professional associations, labor unions and companies like Starbucks or McDonald's.

But ACE’s credit recommendations exist largely behind the scenes, in part because they cater to adult students at open-access colleges -- a group that is often ignored by the mainstream news media or decision makers who still typically attend selective universities. But MOOCs get plenty of attention, and so will ACE for its decision to pursue credit recommendations for the courses.

Coursera has received arguably the most buzz among MOOC providers, thanks to its 200+ courses taught by professors at 34 high-profile institutions including Princeton University, the University of Pennsylvania, Georgia Institute of Technology, the University of Michigan and a smattering of foreign universities.

The for-profit company is less than a year old. It was founded by Daphne Koller and Andrew Ng, two Stanford University engineering professors who in 2011 taught free, online versions of their Stanford courses. Coursera received funding from venture capital firms and quickly managed to ink agreements with their university partners.

Udacity is also a private company supported by venture capital. EdX, in contrast, is a nonprofit supported by Harvard University and the Massachusetts Institute of Technology.

Ng and Koller, who are on leave from Stanford, have stuck to a build-it-and-they will-come approach to their business plan. They have repeatedly said the company has no desire to become an accredited, credential-issuing institution, arguing that it will be an extension of higher education, rather than a direct competitor. Ng and Koller have also shown little interest in pushing a pathway to college credits for Coursera’s offerings, at least until now.

“We believe strongly in the value of a college degree and, by offering these high-quality courses to students in a way that opens the potential of college credit, we hope to ease the path for students toward graduation," Koller said in a written statement.

Monetizing MOOCs

Coursera will make some money on credit recommendations, assuming a few of its courses get a thumbs-up from ACE. The likely scenario would be for students to pay for their statements of accomplishment, with that revenue then being divided by Coursera; the universities whose professors created the courses; and, also importantly, ACE.

The company is developing ways to proctor its MOOC assessments, probably through a webcam system where an actual human watches test takers as they work on a "final exam." It plans to charge extra for certificates that include proctoring. Ng said a normal statement of accomplishment would eventually cost $30 to $100, with a proctored version running between $150 and $250. Those amounts are still relatively cheap for online credit, but the money could add up for Coursera, which has had courses attract more than 100,000 students.

Broad said Coursera in August approached the council with the idea of attaching credit recommendations to select MOOCs. A formal agreement is in place, she said, and ACE will begin reviewing courses soon. It will take months to make decisions on whether credit is warranted. A spokeswoman for Coursera said a small number of courses would be considered initially, perhaps eventually as many as 8-10.

As with all other ACE training program reviews, individual colleges will get the final say on whether to accept credit recommendations, she said, even if they generally sign onto ACE’s decisions. The council’s faculty teams will go MOOC by MOOC, and will look at student outcomes, engagement levels, assessments and how to authenticate student identities, said Broad. “That process is very much like regional accreditation.”

ACE is “actively engaged” with EdX to come up with a similar agreement, she said.

Ng said the initial revenue potential for both credit recommendations and licensing deals like the one with Antioch would probably be limited.

“I'm not anticipating that this will be a significant profit for us, definitely not in the short term,” he said, adding that the deals would mostly cover costs.

Ng also said that even if institutions begin accepting credit recommendations from ACE, he does not expect those colleges will allow students to transfer in a large number of MOOC credits. And he said the credit recommendations will drive more people into, not away from, traditional higher education. “Credit has always been important,” he said. “Despite all the excitement around MOOCs, I think for the foreseeable future, university degrees will remain valuable."

Free and Open

MOOCs remain tantalizing for their potential use by students seeking prior learning credit through portfolios. That process could get a boost if the courses were closely tied to online portfolio-based services like LearningCounts.org, an offering from the Council for Adult and Experiential Learning (CAEL), or those from individual colleges like the University of Maryland University College. In that scenario, the MOOC providers could direct students toward portfolio services and share data with them, such as records of student engagement, to help verify whether a student participated in the course.

CAEL held its annual meeting in Washington, D.C., last week. Participants discussed whether such agreements could be on the way as well as how they might work. Some observers said there are disagreements about whether the portfolio-based approach or credit recommendations based on course review make the most sense. So far, however, including MOOCs in portfolios is something enterprising students will have to figure out on their own.

Meanwhile, several colleges plan to use course material from MOOCs for credit-bearing classes. For example, MassBay Community College will use an EdX course in introductory computer science next year. A veteran professor at Mass Bay, Harold Riggs, will teach the course, refining and emphasizing material to reflect how he thinks it can best be taught to the community college’s students, said Jeremy Solomon, a Mass Bay spokesman.

San Jose State University has begun using an EdX course in a similar way. In both cases, the MOOCs serve more like online course material – open education resources (OER) – than as freestanding classes. And EdX made its courses available free, with little red tape attached. Of course, as a nonprofit attached to universities with deep pockets, EdX might not have the same revenue pressures Coursera and Udacity will likely face.

The free and easy sharing of lessons about MOOCs is part of the Gates Foundation’s goals with its grants for the creation of introductory and remedial MOOCs. Those relatively modest grants, all but one of which are for $50,000, went mostly to research universities. But several community colleges received grants, including the Cuyahoga Community College Foundation, Mt. San Jacinto College and Wake Technical Community College.

At Wake Tech the MOOC will be a remedial mathematics course, said Stephen C. Scott, the college’s president. The course, which is still being developed, will be broken into modules and feature group interaction and some faculty oversight.

The introductory MOOC grants seem like a feel-good story – open-source teaching aimed at underserved student groups. But even that project can be a tough sell. For example, professors at colleges in the San Diego Community College District recently protested their institution’s interest in applying for the grant, passing a resolution that said the proposed MOOCs should go through a deliberate curriculum review process and that the courses are "teacherless classrooms" that undermine academic integrity. The district has since formed a committee to discuss MOOCs.

Faculty are not convinced that the courses are the "best thing since sliced bread," said Jim E. Miller, a professor of English at San Diego City College. And that apprehension isn't due to faculty being Luddites, he said, but arises instead from concerns that the rapid rush toward MOOCs might be driven by a "kind of blind technophilia."